Morgan Stanley double downgrades Snap, citing TikTok competitive threat and weak economy

Now is not the time to buy shares of Snap as the social media company faces ongoing headwinds to its advertising business in a weakening macro environment, Morgan Stanley says. Analyst Brian Nowak double downgraded the stock to underweight, saying in a note to clients Monday that the company faces execution risk and potential ad dollar losses in a toughening economic picture. “We don’t think SNAP’s ad business is as developed (and performance, “always on” driven) as we previously did…and growing this type of business through a weakening macro environment is likely to be even more challenging,” Nowak wrote. The note from Morgan Stanley comes after the social media company’s disappointing second-quarter results, which sent shares of the Snapchat parent plunging about 39% in one day and brought with it a slew of analyst downgrades . The results have made Morgan Stanley “more cautious” about the stock while also offering further clues into the company’s “less developed” advertising business and its shift toward branded advertising spending in a post-IDFA world, Nowak said. “The macro challenge now is that those branded dollars are among the first to be cut in times of economic weakness,” he wrote. “Combine this with the fact…
Read More